Advisers give their pick of the PEPs
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Your support makes all the difference.IF YOU intend to use your full pounds 6,000 PEP allowance for investing in just one unit trust, you must choose one which has at least 50 per cent of its money invested in UK or EU shares or bonds, writes Clare Arthur. The Independent on Sunday asked four leading independent investment advisers to name their favourite 'peppable' unit trust.
Peter Hargreaves,
Hargreaves Lansdown
"As 70 per cent of fund managers do not beat the stock market, and as returns from equities are likely to be lower this year, I would go for an index tracker. If returns are low, charges become more important - if you get a return of 20 per cent, a 1 per cent charge is not so bad. But if you are only getting returns of 8 per cent, a 1 per cent charge is very significant. The charges on the Gartmore UK Index PEP are not the very lowest but its performance has been impressive, probably because it fully replicates the whole UK market."
Gartmore UK Index PEP
Fund manager: Gartmore
Initial charge: 0%
Annual charge: 1%
Total return over 1 year: 21%
Total return over 3 years: 43%
Total return over 5 years: 102%
Investment strategy: to track the All Share index as closely as possible.
Graham Hooper,
Chase de Vere Investments
"Perpetual High Income. Neil Woodford, the fund manager, is very good, he can choose whatever he wants from the stock market and he really delivers. He manages it on a total returns basis, so if you are the type of investor who wants growing income every year, this is probably not the fund for you. But if you don't mind a variable income - currently 4.1 per cent - and you want some capital growth, this is a good choice."
Perpetual High Income
Fund manager: Perpetual
Initial charge: 5.25%
Annual charge: 1.25%
Total return over 1 year: 24%
Total return over 3 years: 71%
Total return over 5 years: 164%
Investment strategy: the fund is tilting towards lower-risk sectors. Financials such as banks and insurers should benefit from low interest and inflation rates.
Chris Wicks,
Kidsons Impey Scott Lang
"My favourite personal equity plan currently is the Credit Suisse Income PEP. It's triple 'A' rated, the highest grading from fund analysts Fund Research, it has a good stable size of pounds 80m, an excellent yield of 4.2 per cent and 18 years of increasing dividends."
Credit Suisse Income PEP
Fund manager: Credit Suisse
Initial charge: 5.25%
Annual charge: 1.2%
Total return over 1 year: 16%
Total return over 3 years: 42%
Total return over 5 years: 123%
Investment strategy: to provide growth in capital and income, through investment in shares, fixed income bonds and convertibles mainly of leading UK companies.
Paul Boni,
Berry Birch & Noble
"I'd choose the Fidelity Triple Performance personal equity plan. It gives you exposure to markets outside the UK - 50 per cent of the money is invested in Fidelity's Special Situations fund, 25 per cent in its European fund, and 25 per cent in South East Asia. The last two are star performers.
Fidelity Triple Performance PEP
Fund manager: Fidelity
Initial charge: 3%
Annual charge: 1.5%
Total return over 1 year: 23%
Total return over 3 years: 84%
Total return over 5 years: 155%
Investment strategy: the fund has been designed for people looking for high capital growth who do not want a PEP which is totally invested in the UK.
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